Sec. 101. Special partitions of eligible multiemployer plans
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Title IV of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1301 et seq.) is amended by inserting after section 4233 the following: Upon the application by the plan sponsor of an eligible multiemployer plan described in subsection
(b)for a partition of the plan, the corporation shall order a partition of the plan in accordance with this section, provided the other requirements in this section are met. The corporation shall make a determination regarding the application not later than 150 days after the date such application was filed (or, if later, the date such application was completed) in accordance with regulations that shall be issued by the corporation under subsection (h). Not later than 30 days after submitting an application for partition of a plan under paragraph (1), the plan sponsor of the plan shall notify the participants and beneficiaries of such application, in the form and manner prescribed by the corporation. The corporation shall implement the partition order issued under this section not later than 60 days after the completion of the corporation’s determination under paragraph (1). Partitions under this section shall apply only with respect to any eligible multiemployer plan whose plan sponsor files an application that is determined by the corporation to be complete pursuant to regulations issued by the corporation under subsection (h)(1) and that is filed by the later of the time specified in such regulations or 1 year after the corporation issues such regulations. For purposes of this section— The term eligible multiemployer plan means a multiemployer plan that meets any of the following conditions: The plan became insolvent (as described in section 4245(b), as in effect the day before the date of enactment of this section) on or after December 16, 2014, and prior to the date of enactment of this section and has not terminated. The plan— was certified, in the most recent annual certification filed pursuant to section 305(b)(3) (as in effect on the day before the date of enactment of this section) before the date of enactment of this section, to be in critical and declining status (as defined in section 305(b)(6), as so in effect), and has not terminated as of such date; implemented a suspension of benefits under section 305(e)(9) (as in effect on the day before the date of enactment of this section) prior to the date of enactment of this section; was certified, in the most recent annual certification filed pursuant to section 305(b)(3) (as so in effect) before the date of enactment of this section, to be in critical status (as defined in section 305(b)(2), as so in effect), and has not terminated as of such date; has a funded percentage that is less than 40 percent on a current liability basis, based on the most recent Form 5500, Schedule MB, line 1b(1) for current value of assets and line 1d(2)(a) for current liability, filed before the date of enactment of this section; and has an active to inactive participant ratio that is below 40 percent as of the most recent Form 5500 filed before the date of enactment of this section; or was certified, in the most recent annual certification filed pursuant to section 305(b)(3) (as so in effect) before the date of enactment of this section, to be in critical status (as defined in section 305(b)(2), as so in effect) and has not terminated before such date, has an active to total participant ratio that is below 20 percent as of the most recent Form 5500 filed before the date of enactment of the section; and has more than 100,000 participants as of the most recent Form 5500 filed before the date of enactment of the section; and is not the plan described in section 9701(a)(3) of the Internal Revenue Code of 1986, determined without regard to the limitation on participation to individuals who retired in 1976 and thereafter. An eligible multiemployer plan (other than a plan eligible under paragraph (1)(B)(i)(II)) shall file with the corporation for partition under this section. If an eligible plan required under the preceding sentence to file for partition does not so file in a timely manner, the plan is subject to termination under section 4042. If a plan is reasonably determined to be ineligible for future adjustments under subsection (j)(3)(C)(iii)— subparagraph
(A)shall not apply to such plan, and such plan may withdraw the partition application (or, as provided by the corporation in regulations, not submit such application at all). As a condition of any partition under this section, the rate of future accruals, during the period beginning on the date of the partition order and ending 15 years after the effective date of the partition, shall not exceed the lesser of— a monthly benefit (payable as a single life annuity commencing at the participant’s normal retirement age) equal or equivalent to 1 percent of the annual contributions required to be made with respect to a participant as of the first day of the first plan year that begins after the date of enactment of this section; or the accrual rate under the plan on such first day. The plan sponsor may determine the equivalent rate of future accruals based on the standard or average contribution base units which the plan sponsor determines to be representative for active participants and such other factors as the plan sponsor determines to be relevant. Such determinations by the plan sponsor may be made on the basis of individual active participants, groups of active participants, or all active participants in total. To the extent that the rate of future accruals exceeds the limitation determined under this paragraph, the plan sponsor shall adjust the rate of future accruals in accordance with this paragraph effective as of the date of the partition order. As a condition of any partition under this section, the plan sponsor of an eligible multiemployer plan shall eliminate all adjustable benefits in the nature of an early retirement subsidy (including a subsidized early retirement actuarial reduction factor) for all participants not in pay status as of the date of the partition application. Nothing in this paragraph shall affect the right of a participant to receive an unsubsidized early retirement benefit. The plan created by the partition order is a successor plan to which section 4022A applies. The plan sponsor of an eligible multiemployer plan prior to partition and the administrator of such plan shall be the plan sponsor and the administrator, respectively, of the original plan and the successor plan created by the partition order. The remaining plan after benefits have been transferred to the successor plan pursuant to the partition order is the original plan. Benefit payments made by the successor plan shall not constitute a reduction in benefits with respect to the original plan. Upon approval of an application filed pursuant to subsection (i), the corporation shall provide financial assistance to each successor plan of an eligible multiemployer plan. Financial assistance provided to a successor plan pursuant to this subsection shall not be subject to the requirements of section 4261(b)(2), except that the corporation may condition receipt of financial assistance under this subsection on reasonable terms consistent with regulations prescribed by the corporation to prevent abuse of the multiemployer plan program or prevent unreasonable risk of loss to the corporation. For each participant or beneficiary of the plan whose benefit or portion thereof was transferred to the successor plan, the original plan shall pay a monthly benefit to such participant or beneficiary for each month in which such benefit is in pay status following the effective date of such partition in an amount equal to the excess of— the monthly benefit that would be paid to the participant or beneficiary under the terms of the original plan had the transfer of benefits not occurred (taking into account any applicable benefit reductions or plan amendments following the effective date of the partition); over the monthly benefit for such participant or beneficiary that is paid by the successor plan. A partition order under subsection
(a)shall provide for a transfer of benefits from the original plan to the successor plan in the amount necessary for the original plan to be projected to remain solvent indefinitely, as defined in section 1.432(e)(9)–1(d)(5)(ii) of title 26, Code of Federal Regulations (excluding subparagraph (A)(2)), as in effect on the date on which such regulations were issued, using actuarial and other assumptions to be promulgated by the corporation in the regulations described in subsection (h)(4). Such transfer amounts shall be determined without respect to the amount guaranteed under section 4022A. In determining the transfer amount under paragraph (1), the corporation shall take into account all obligations of the original plan, including the payment of benefits required under subsection
(f)in excess of the amount paid by the successor plan and all plan expenses and premium amounts. The amount of the transfer of benefits shall be based on a projection of plan assets and liabilities to the projected partition date, as specified in the partition application, and— the projection of plan assets shall be based on the fair market value of plan assets as of the end of the last plan year preceding the date of the application, with appropriate adjustments for actual or anticipated plan experience through the projected partition date; and the projection of plan liabilities shall be based on the participant data used in the most recently completed actuarial valuation. With respect to an insolvent plan described in subsection (b)(1)(A), the corporation shall provide financial assistance to the original plan, as needed for the plan to pay to each participant and beneficiary in the successor plan the excess, if any, of— the monthly benefit that would be paid to the participant or beneficiary under the terms of the original plan, prior to insolvency, had the transfer of benefits not occurred (taking into account any applicable benefit reductions or plan amendments following the effective date of the partition); over the monthly benefit for such participant or beneficiary that is paid by the successor plan. The corporation shall issue regulations on the requirements for partition applications not later than 180 days after the date of enactment of this section. By regulation, the corporation may assign eligible multiemployer plans into groups, based on plan size (prioritizing larger plans), projected date of plan insolvency (prioritizing plans expected to become insolvent within 5 years), or such other factors as the corporation deems appropriate, for determining when an application for partition under this section may be filed. Any regulations issued under this section shall be interim final or final regulations. If the corporation does not issue regulations within 180 days after the date of enactment of this section, any applications for partition under this section filed after the date that is 180 days after such date of enactment (and prior to the date regulations are issued) shall be deemed to be approved. The regulations under this subsection shall include rules for determining which participants and beneficiaries are included in the transfer of benefits. The regulations under this subsection shall prescribe acceptable actuarial assumptions, for purposes of an application, relating to the following: Future investment returns which must be consistent with the applicable discount rate under section 304, except that— in no case shall the assumption for future returns be less than 5.5 percent for purposes of determining the initial partition amount; and in no case, while the partition amount is being determined or while the partition is in effect, shall the assumption used for determining adjustments under subsection
(j)be less than the lesser of— the rate equal to the 24-month average of the third segment rate (as defined in section 303(h)(2)(C)(iii)), as of the date the determination is made, without regard to section 303(h)(2)(C)(iv), increased by 2 percent; or 5.5 percent. Future contribution base units. Future contribution rate increases, taking into account the adopted rehabilitation plan. Future withdrawal liability payments. Future administrative expenses. Mortality. Any other assumptions deemed by the corporation to be material. For purposes of paragraph (4), when prescribing acceptable actuarial assumptions, the corporation shall not require a plan sponsor to obtain data or other information that a plan sponsor should not reasonably be expected to have in its possession, unless it can be obtained with reasonable effort and expense. For purposes of paragraph (4)(B), an assumption related to future contribution base units shall be considered reasonable and appropriate for purposes of the application under this section, provided that— if the recent experience of the plan has been declining contribution base units, the plan actuary may assume future contribution base units will continue to decline at the same annualized trend as over the 5 immediately preceding plan years unless such assumption is unreasonable based on criteria which may be prescribed by the corporation by regulation, and if the recent experience of the plan has been increasing, or neither increasing nor decreasing, contribution base units, the plan actuary may assume future contribution base units will remain unchanged indefinitely, unless such assumption is unreasonable based on criteria the corporation may prescribe. The regulations under this subsection shall include rules for determining the amounts of benefits guaranteed under section 4022A, including acceptable methods to approximate credited service for participants and beneficiaries in pay status where records cannot reasonably be obtained by the plan administrator. An application for partition under this section submitted by a plan sponsor shall be filed electronically and contain the required information set forth in regulations promulgated by the corporation. The corporation shall approve a partition application if the applying plan meets the requirements for a partition under this section. In reviewing an application under this section, the plan shall propose the initial amount of the transfer of benefits under the partition order that is required under subsection (g)(1) and the corporation shall review and modify the amount, if applicable, pursuant to its regulations. If the corporation determines the plan to be ineligible under subsection
(b)for a partition under this section, the corporation shall notify the plan sponsor in writing of such determination not later than 30 days after the application is filed. Such notice shall specify the reasons the plan is ineligible for a special partition. The applicant plan will have a period of at least 60 days, or longer if specified by the Corporation through regulations, to modify its application, which shall be subject to expedited review by the corporation and, for purposes of satisfying the 1-year filing requirement for special partition, will relate back to the date the application was initially filed. If the corporation determines the application by the plan sponsor lacks information necessary for the corporation to approve or deny the application, the corporation shall notify the plan sponsor in writing, detailing which components are missing, not later than 30 days after the application is filed. Nothing in the preceding sentence shall prevent the corporation from asking the plan sponsor at a later date for additional information necessary to determine the partition amount. The factual submissions made by a plan sponsor in a partition application, including participant data and benefit calculations, shall be presumed to be correct, unless clearly erroneous. After benefits have been transferred under the partition order, the corporation shall, at least every third year thereafter, adjust the transfer of benefits, as necessary to enable the original plan to be projected to remain solvent indefinitely, consistent with limitations on guaranteed benefits (if applicable under paragraph (3)(C)). The adjustments shall be made based on such procedures as the corporation shall prescribe by regulation. If the original plan is not projected to be solvent 30 years after any adjustment review date (without regard to whether or not an adjustment takes place in connection with such date), taking into account the adjustments permitted by this paragraph, such plan shall electronically file a report with the corporation, as the corporation shall require by regulation. If the plan subsequently reports for 3 consecutive years for which an adjustment review is conducted that the plan is not projected to be solvent 30 years after the date of each such adjustment review, the plan shall be terminated. The adjustment shall be based solely on, as applicable, updated participant data, calculations of guaranteed benefits for participants and beneficiaries covered under the successor plan, contribution experience, current actuarial assumptions (if changed since the initial transfer of benefits), and changes in the market value of the original plan's assets. The corporation shall not adjust under paragraph
(1)the transfer of benefits to provide additional financial assistance if the corporation determines that the original plan or the bargaining parties committed an abuse of the multiemployer program with respect to the original plan or otherwise unreasonably took actions (or avoided taking actions) with the result that there is an increased risk of loss to the corporation with respect to the successor plan or the original plan. No adjustments under paragraph
(1)to the transfer of benefits shall be allowed with respect to any plan year beginning 30 or more years after the date of the partition. If the initial transfer of benefits from the plan under subsection (g)— was less than 100 percent of the amount of benefits under the plan guaranteed under section 4022A for each participant, any adjustment under paragraph
(1)shall not result in a benefit for any participant in the successor plan in excess of 100 percent of the participant's guaranteed benefit, determined as of the date of the initial transfer; was equal to or greater than 100 percent of the amount of benefits so guaranteed, any adjustment under paragraph
(1)shall not result in a benefit for any participant in the successor plan in excess of the amount of the participant's benefit subject to the initial transfer; and was less than 5 percent of the amount of benefits so guaranteed, there shall be no adjustment under paragraph (1). With respect to an original plan partitioned under this section that subsequently is terminated or becomes insolvent, the benefits transferred under the partition order shall revert to the original plan, the partition shall be reversed, and financial assistance provided pursuant to the partition order shall cease. The corporation shall promulgate regulations describing the process and requirements for reporting and the circumstances under which plans will be terminated in accordance with the provisions of section 4041A pursuant to this subsection. An eligible multiemployer plan described in subsection (b)(1)(B)(i)(II) may be approved for a partition under this section only if it unwinds the suspension, and, if applicable, the previous partition described in such subsection in accordance with regulations to be issued by the corporation, in consultation with the Secretary of the Treasury. The unwinding of a suspension or partition described in such subsection must be contingent upon the corporation's approval of the application for partition under this section. In the case of a partition described in paragraph (1), the suspension of benefits shall be unwound retroactively. Benefits shall be restored to pre-suspension levels as of the effective date of the partition under this section and participants who are receiving benefits on the date of enactment of this section shall, beginning not later than 180 days after the approval of a partition order under this section, receive a special payment, payable over a period not to exceed 2 years, equal to the amount of benefits previously suspended as prescribed in regulations. Such plans are subject to the requirements of subsection (c). Plan participants and beneficiaries shall not have a claim under section 409 or section 502 of this Act against plan fiduciaries with respect to an application for partition assistance made in good faith or the allocation of benefit liabilities between the successor plan and the original plan. A partition order under this section is taken into account in determining withdrawal liability under section 4201 of an employer that contributes to the original plan, provided that the employer remains a contributing employer to the original plan (and in compliance with any applicable funding improvement or rehabilitation plan) for a period of 15 years following the effective date of the liability transfer. If an employer completely withdraws or partially withdraws from a plan that was partitioned under this section at any time within the 15-year period described in paragraph (1), the transfer of benefits under subsection
(g)shall not be taken into account in computing the employer’s complete or partial withdrawal liability, and the amount of the annual withdrawal liability payment amount otherwise determined shall be increased by 10 percent. Subparagraph
(A)shall not apply— if the complete or partial withdrawal is due to a decertification, a change in bargaining representatives, disclaimer of interest, or because of an event described in section 4218; or in the case of a partial withdrawal due to a bargaining unit or facility take-out if the contribution base units for the plan year immediately following the year of the partial withdrawal are at least 97 percent of the contribution base units for the plan year immediately preceding the year of the partial withdrawal. Paragraphs
(1)and
(2)shall not apply to an employer that first had an obligation to contribute to the plan partitioned under this section after the date of enactment of this section. If the plan sponsor adopts a plan amendment that increases plan liabilities (due to any increase in benefits, any change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable) that takes effect after the effective date of the partition, the original plan shall make payments to the corporation for each year during the 20-year period following the effective date of the benefit increase. For purposes of this paragraph, an increase in benefits due to an increase in the contribution rate or compensation shall be considered a prohibited increase in benefits. Subparagraph
(A)shall not apply to any change in future accruals after the end of the 15-year period during which such accruals are limited under subsection (c). The amount paid by the original plan to the corporation under paragraph
(1)each year shall be equal to the lesser of— the total value of the increase in benefit payments for the year that is attributable to the benefit improvement; or the total benefit payments from the successor plan for such year. Payments under paragraph
(2)shall be made by the original plan at the time of, and in addition to, any premium imposed by the corporation on the plan. The corporation is authorized to bring an action against the original plan to prevent or correct any and all actions by plan sponsors, a principal purpose of which is to evade or avoid payments due to the corporation under paragraph (2), or that may have the effect of evading or avoiding such payments. Payments under paragraph
(2)shall be determined without regard to such actions by plan sponsors. The requirements of this subsection do not apply to an increase or change in benefits that is required by law or that is a de minimis change, as determined by the corporation. Not later than 90 days after the first day of each plan year beginning after the effective date of a partition under this section, the plan sponsor of the original plan shall electronically file with the corporation a report including the following information: The estimated funded percentage (as defined in section 305(k)(2)) as of the first day of such plan year, and the underlying actuarial value of assets and liabilities taken into account in determining such percentage. The estimated amount of all investment returns for the original plan during the preceding plan year. The market value of the assets of the plan (determined as provided in paragraph (1)) as of the last day of the plan year preceding such plan year. The total value of all contributions made by employers and employees during the plan year preceding such plan year. The total value of all benefits paid during the plan year preceding such plan year. Cash flow projections for such plan year and the 29 succeeding plan years, and the assumptions used in making such projections. Funding standard account projections for such plan year and the 9 succeeding plan years, and the assumptions used in making such projections. Any significant reduction in the number of active participants during the plan year preceding such plan year, and the reason for such reduction. A list of employers that withdrew from the plan in the plan year preceding such plan year, and the resulting reduction in contributions. A list of employers that paid withdrawal liability to the plan during the plan year preceding such plan year and, for each employer, a total assessment of the withdrawal liability paid, the annual payment amount, and the number of years remaining in the payment schedule with respect to such withdrawal liability. Any material changes to benefits, accrual rates, or contribution rates during the plan year preceding such plan year, and whether such changes relate to the conditions of the partition assistance. Details regarding any funding improvement plan or rehabilitation plan and updates to such plan. The number of participants and beneficiaries during the plan year preceding such plan year who are active participants, the number of participants and beneficiaries in pay status, and the number of terminated vested participants and beneficiaries. For— the first plan year after the effective date of the partition, a list of all employers that contributed to the plan during the plan year; and subsequent plan years, changes to the list of contributing employers. The information contained on the most recent annual return under section 6058 of the Internal Revenue Code of 1986 and actuarial report under section 6059 of such Code of the plan. Copies of the plan document and amendments, other retirement benefit or ancillary benefit plans relating to the plan and contribution obligations under such plans, a breakdown of administrative expenses of the plan, participant census data and distribution of benefits, the most recent actuarial valuation report as of the plan year, financial reports, and copies of the portions of collective bargaining agreements relating to plan contributions, funding coverage, or benefits, and such other information as the corporation may reasonably require. A list of the employers that contributed more than 5 percent of total contributions to the plan during the preceding plan year, and the amount contributed by each such employer. Any information or documentary material submitted to the corporation pursuant to this subsection that could identify individual employers, if clearly designated by the person making the submission as confidential (on each page in the case of a document, and in the file name in the case of a digital file), shall be exempt from disclosure under section 552 of title 5, United States Code, and no such information or documentary material may be made public except as may be relevant to any administrative or judicial action or proceeding, including an informal rulemaking. Subject to paragraph (2), except in any plan year in which the plan is certified by the plan actuary as in unrestricted status pursuant to section 305(b)(1)(B), the plan sponsor of an original plan may not accept a collective bargaining agreement with respect to such original plan that includes a reduction in employer contribution rates. Under a process to be promulgated by regulation by the corporation, a plan sponsor of an original plan may petition the corporation for the authority to approve a collective bargaining agreement that contemplates a reduction in employer contribution rates. Such regulation shall include a requirement that a plan petitioning for such authority demonstrate that its existing contribution rates are higher than contribution rates paid on behalf of other workers covered by collective bargaining agreements in the same industry in nearby localities. The corporation shall approve the petition if the plan sponsor demonstrates that the reduction in contribution rates improves the long-term funding or solvency of the plan, and does not increase the corporation's expected loss with respect to the plan. Any accumulated funding deficiency (as defined in section 304(a)) of a plan shall be reduced to zero as of the first day of the plan year during which the partition under this section is effective. The corporation, the Secretary, and the Secretary of the Treasury may, individually or collectively, promulgate regulations to reduce reporting and disclosure obligations for successor plans, including coordinating with reporting and disclosure by original plans. . Section 4233 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1413 ) is amended by adding at the end the following: This section shall not apply to an eligible multiemployer plan described in section 4233A(b) that receives a special partition under that section. . The table of contents in section 1 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1001 et seq.) is amended by inserting after the item relating to section 4233 the following: 4233A. Special partitions of eligible multiemployer plans. .
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